Is ECMMX a Strong Bond Fund Right Now?
If you're looking for a Muni - Bonds fund category, then a potential option is Eaton Vance MA Municipals C (ECMMX). ECMMX bears a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.
Objective
ECMMX is one of many Muni - Bonds funds to choose from. Muni - Bonds funds invest in debt securities issued by states and local municipalities, which are typically used to pay for infrastructure construction, schools, and other government functions. These securities can be backed by taxes (revenue bonds), but others are known as "general obligation" and are not necessarily backed by a defined source. These bonds are especially attractive because of their inherent tax benefits.
History of Fund/Manager
ECMMX is a part of the Eaton Vance family of funds, a company based out of Boston, MA. Eaton Vance MA Municipals C made its debut in July of 2006, and since then, ECMMX has accumulated about $1.90 million in assets, per the most up-to-date date available. Craig Brandon is the fund's current manager and has held that role since February of 2010.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of -0.73%, and it sits in the bottom third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 2.06%, which places it in the bottom third during this time-frame.
It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.
When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Compared to the category average of 9.02%, the standard deviation of ECMMX over the past three years is 5.97%. Looking at the past 5 years, the fund's standard deviation is 6.47% compared to the category average of 10.49%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a given bond's interest rate sensitivity, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.
For investors who think interest rates will rise, this is an important factor to consider. ECMMX has a modified duration of 6.36, which suggests that the fund will decline 6.36% for every hundred-basis-point increase in interest rates.
Income
Income is often a big reason for purchasing a fixed income security, so it is important to consider the fund's average coupon. Average coupon is a look at the average payout by the fund in a given year. For example, this fund's average coupon of 4.69% means that a $10,000 investment should result in a yearly payout of $469.
While a higher coupon is good for when you want a strong level of current income, it could present a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond. Investors also need to consider risk relative to broad benchmarks, as income is only one part of the bond picture.
With a beta of 0.75, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, ECMMX has a negative alpha of -1.55 , which measures performance on a risk-adjusted basis.Ratings
Investors should also consider a bond's rating, which is a grade "AAA" to "D" given to a bond that indicates its credit quality. With this letter scale in mind, ECMMX has 66.63% in high quality bonds rated at least "AA" or higher, while 22.68% are of medium quality, with ratings of "A" to "BBB". The fund has an average quality of AA, and focuses on high quality securities.Expenses
As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, ECMMX is a no load fund. It has an expense ratio of 0.09% compared to the category average of 0.82%. ECMMX is actually cheaper than its peers when you consider factors like cost.
Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment has no minimum amount.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
Overall, Eaton Vance MA Municipals C ( ECMMX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, Eaton Vance MA Municipals C ( ECMMX ) looks like a somewhat average choice for investors right now.
For additional information on the Muni - Bonds area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into ECMMX too for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
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This article originally published on Zacks Investment Research (zacks.com).
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